We are used to transferring money with traditional money, today even children can use it. But what is cryptocurrency in simple words, this operation cannot be done by a bankproduce twice or pretend that it was not there because the bank is responsible for her confirmation and Security, and for their work, banks charge commissions from customers and dictate their terms and conditions for using financial products. Cryptocurrency works in a fairly similar way. But there is one important difference. Cryptocurrency does not have a single center. , blocks in the chain that are protected by cryptographic keys and this technology is called blockchain. If you change the information in any of the blocks, then the whole chain will also change. Cryptocurrency is not controlled by states or central banks, it makes transaction processing independent and transparent for all network participants. Computers Included in the blockchain, and at the same time also an anonymous legal status.
In simple words, it can be summarized that the cryptocurrency replaces banks and traditional payment systems, taking financial transactions out of the control of states and corporations.
And now the next important Aspect What does it mean to mine cryptocurrency? The blockchain is constantly being formed, with the advent of data on new operations, processing transactions in the blockchain and selecting keys for encryption requires computing power and effort. For this work, the people who perform it receive a reward, and units of this reward, and is a bitcoin, litecoin, ethereum coin. This is an example of how cryptocurrency mining works. In simple words, it can be described as a process of sealing blocks in a blockchain that supports the existence of a payment system and the cryptocurrency itself, but mining is one of the options for how to earn this cryptocurrency, you can’t call it simple now I’ll explain in a nutshell
Since several computers inside the cell are simultaneously calculating the keys, there is competition between them and the one who owns the best equipment gets the reward and does it quickly because of this, mining becomes more and more expensive and energy-intensive, so individually people do it less and less. Usually people or companies get together and buy a large number of computers, they are connected to the network on an ongoing basis to perform calculations and this is called a cryptocurrency firm, or a mining farm.
So we figured out mining.
Now let's take a look at the features of a cryptocurrency, the main characteristics are embedded in the very definition of what a cryptocurrency is, and in simple words for dummies, several key features can be distinguished
the first is decentralization and lack of control, information about the transaction in the blockchain is stored on a huge number of servers around the world and it is equally available to all participants
the second is anonymity, despite the openness of information about transactions, users see only each other's wallet numbers, for example, as a number accounts in the bank or card details, but the owner of the wallet remains unknown
the third is the Irreversibility of transactions, a record of an operation in a block leads to a change in the entire chain, so it will not be possible to cancel the operation
The fourth is the lack of a physical form; all images with coins with coins are nothing more than symbolism. This means that the computer code cannot be touched and touched, and so on, and a cryptocurrency wallet is a storage of information online or on a device, that is, it has nothing in common with a familiar wallet, despite this, cryptocurrencies, like traditional money, have and mission, it may or may not be limited.
Let's analyze this feature of the cryptocurrency in simple words using the example of bitcoin in its source code that the total number of coins cannot exceed 21 million and the emission affects the price of the cryptocurrency. After all, if a new portion of coins is issued, then the unit value usually falls.
And finally, why do we need cryptocurrency? Well, why is it the future, in 2009, humanity learned what bitcoin is, and cryptocurrency gradually became part of the information field
Today, there are thousands, even tens of thousands of cryptocurrencies, and each of them has its own characteristics and purposes.payment today many companies accept bitcoin and other popular coins for payment, then blockchains allow you to quickly and quickly process transactions without commission. The speed of many modern cryptocurrencies is close or exceeds that of traditional payment systems such as Visa and Mastercard, simple In other words, what a cryptocurrency is for can be described as conducting financial transactions quickly without intermediaries, anonymously and decentralized. Also, cryptocurrencies appear as tokens of blockchain projects of centralized finance defi application Play Turn games or regular games, and so on, it can be both an internal unit of account of such a network and a way to develop the project itself and attract new resources to it, for example, one of the most popular ethereum coins has formed a large network that serves smart contracts.
Well, or an even simpler example. Do you believe in Apple, you buy Apple shares like this, and most cryptocurrencies are not pegged to gold or traditional currencies, their exchange rate fluctuates based on supply and demand in the market. Therefore, coins are highly volatile and many successfully earn on fluctuations in quotes by selling and buying cryptocurrencies on exchanges. Well, Trading is another way to use cryptocurrencies
And finally, many cryptocurrencies demonstrate an impressive growth in the long term, the already mentioned bitcoins, the ether has grown tens of thousands of times since its inception, so cryptocurrency is a risky but very profitable and promising detective financial instruments
INgeneral summing up everything that I said earlier, the coolest features of cryptocurrency are decentralization, anonymity, speed and transaction price. Well, as well as the fact that I can earn money on it simply by investing in a project that you believe in. Well, or by speculating on fluctuations in highly volatile prices.
On this note, my article comes to the end .
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